Are Filipino entrepreneurs ready for AEC?

That there is hardly any discussion about the start of the implementation of the Asean Economic Community next year is proof that not only SMEs (small and medium enterprises) but also the giant multi-million corporations that own the great malls and hyper- and supermarkets don’t like it to start next year or maybe any year.

That is because the AEC will virtually remove all kinds of tariff and any kind of protective mechanism on all the other Asean countries’ products entering the Philippines. Of course, Philippine products entering the nine other Asean countries will not be subject to any kind of tariff protection either.

But the fear of the Filipino businessmen is that very few of our manufactured products are better than those made in the other Asean countries. In fact a lot of the supermarket products middle and upper class Filipino families buy are made by factories in Thailand, Malaysia, Singapore, Vietnam and Indonesia. (That’s mentioning only Asean countries and not China, where about 80 percent of the products we buy come from, imported by Philippine-based Chinese trading companies.)

We used to be the manufacturer of regular size and big-size packages of the most successful Unilever and Procter and Gamble products. We, the Philippines, or actually the Philippine branches of Unilever and Procter—Philippine Refining Company (PRC) and Philippine Manufacturing Company (PMC)—exported these products to Thailand, Singapore, Malaysia and our other Asean neighbors. We also exported our marketing executives and brand managers to those countries. Now only the tiny tingi sachets and sizes are made by our factories. Guess why?

The start of the AEC next year was originally set for January 2015. Two years ago, at the Phnom Penh Asean Summit, the leaders of the 10 countries agreed to postpone the implementation by 12 months—from January 1 to December 31, 2015.

This was because most Asean economies were not prepared for economic integration. You can imagine how unready some of the other countries that are poorer than us must be.

But even Malaysia, which is very rich compared with us—and is raring to see the AEC implemented right now—has heard the voices of domestic heavyweights cautioning against Asean economic integration starting too soon.

One of those voices is that of former strongman and Prime Minister of Malaysia Dr. Mahathir Mohamad. Last year, he was reported to have said that Singapore is the only Asean country ready for integration and therefore the poorer and less advanced countries should be allowed to retain tariffs and other forms of economic protection.

But giving some countries or sectors protection in a supposedly single Asean economy would mean there is no single economy to speak off after all.

It seems that even Singapore may not be quite ready.

Last week, a report by Dylan Loh in Singapore-based Channel News Asia said two surveys in the First-World city-state revealed that majority of businessmen in Asean didn’t know what the AEC is. “A survey by the Institute of Southeast Asian Studies found that 55 percent of some 380 firms polled across the region were not aware of the AEC. And Singapore companies had the highest level of ignorance—at 86 percent.”

Another survey, by the Singapore Business Federation, found that about 38 percent of its 1,000 members were ignorant of the impending economic integration of the 10 Asean countries. And Singapore businessmen running smaller companies could not tell what the AEC means or even which countries are members of Asean.

A survey of executives of Big Business and SMEs here will most likely yield similar results.

2 Comments

My son, who is a Teradata consultant, just came from Jakarta to work on a project involving a bank there. The bank he said is a medium level bank and when I asked how big that bank is compared to our banks here he said it is bigger than three of our biggest banks (BPI, BDO, and Metro) combined and it is just a medium sized bank. We should realize how far behind our economy is and be frightened at the immediate implementation of the AEC.

Yes, former Malaysian Prime Minister Mahathir Mohamad is right. The poor countries must be given some protection. Im[plementation of the Asean economic integration should be postponed for three years. This will allow Filipino entrepreneurs one year after this Aquino MisGovernance administration has been gone for one year to prepare themselves to face the swamping of our market with cheaper and better made products from Thailand, Malaysia, Indonesia, Vietnam and Singapore.